Shares of Tesla Inc. headed toward another record Monday and the electric-car maker’s valuation hovered just a few billion dollars short of $1 trillion, after Hertz Global Holdings Inc. announced plans to order 100,000 Teslas and a Morgan Stanley analyst raised his forecast for sales and production.
Tesla’s stock TSLA rallied more than 6%, putting it on track for another record and its biggest one-day percentage increase since April 13, when it rose nearly 9%. The company’s market cap topped $961 billion. The stock will need to close at or above $995.75 for the company’s valuation to hit $1 trillion.
The shares have gained more than 12% in the past four session, including a 5.1% rally in the previous two sessions to close at back-to-back records. Last week it rose 7.9% to mark a ninth-straight weekly gain, the longest such streak since the 12-week winning streak that ended in February 2020.
Hertz emerged from bankruptcy this summer, saying it was a “much stronger” company ready to capitalize on the summer’s travel rebound and skyrocketing car-rental prices amid a scarcity of rentals.
Hertz last week announced plans to offer shares and return to a big-league stock exchange. The company listed a profit for the first six months of the year, but also more than $8 billion in debt.
Hertz said the “initial” order of a total of 100,000 Teslas will be made by the end of 2022. And the car-rental company said it would also invest in new EV charging infrastructure across its global operations in a bid to offer the largest EV rental fleet in North America.
The order was initially reported earlier Monday by Bloomberg.
“While Hertz is in the early stages of electrifying its rental car fleet, Tesla getting an order of this magnitude highlights the broader EV adoption under way in our opinion as part of this oncoming green tidal wave now hitting the U.S.,” analyst Dan Ives wrote in a note to clients.
“The Hertz deal is a ‘major feather in the cap’ for Tesla and speaks to where demand is heading in the EV transformation hitting the auto sector globally,” he said. Ives rates Tesla at outperform with a $1,100 stock price target.
Adam Jonas with Morgan Stanley raised his price target on Tesla shares to $1,200, from $900, in a note Monday. He reiterated the equivalent of a buy rating on the stock.
“The change in (price) target is driven predominantly by higher volume,” Jonas said. Morgan Stanley’s previous forecast of 5.8 million vehicles by 2030 implied an annual growth rate of 23%, which trailed overall EV market growth, he said.
The analyst’s revised volume forecast of 8.1 million vehicles by 2030 units implies an annual growth rate of 28%, which is slightly more than half the 50% growth rate Tesla has targeted.
Reasons not to go with that 50% growth rate include continued supply-chain constraints, infrastructure constraints and “a host of competitive and geopolitical forces that will guide the development of national electric transport ‘utilities’ over time,” Jonas said.
Tesla again has raised prices of some trims for each of its vehicles in the U.S., including a $2,000 price increase for a standard range Model 3.
“The repeated price increases reflects robust consumer demand for Tesla’s vehicles, also demonstrated by the growing wait time for delivery on many variants,” Emmanuel Rosner at Deutsche Bank said in a note Monday.
Tesla Inc. reported quarterly profit and sales on Wednesday despite warning investors that chip shortages, port congestion and other supply-chain and infrastructure challenges are preventing its factories from running at full speed.
Meanwhile, Hertz said it was teaming up with Tom Brady to headline its EV campaign.
“Electric vehicles are now mainstream, and we’ve only just begun to see rising global demand and interest,” said Hertz interim Chief Executive Mark Fields. “The new Hertz is going to lead the way as a mobility company, starting with the largest EV rental fleet in North America and a commitment to grow our EV fleet and provide the best rental and recharging experience for leisure and business customers around the world,” said Fields, a former chief executive at Ford Motor Co. F, -1.97%
Hertz said its customers will be able to rent a Tesla Model 3 at certain locations beginning in early November, and will be expanding through year-end. The company is also installing chargers throughout its networks, giving customers who rent EVs access to 3,000 supercharging stations through the U.S. and Europe.
Tesla’s stock has soared 47.4% year to date, while the S&P 500 index SPX, +0.47% has gained 21%.